Artificial intelligence is reshaping professional services but creating new exposures for the international errors and omissions market, according to the Lloyd’s Market Association. It cautions that reliance on generative AI is introducing risks ranging from liability for mistakes to data protection breaches and regulatory challenges.

The LMA has set out guidance for underwriters on assessing AI-related exposures, including sample questions and considerations for policy wording. It stresses the need for fair presentation of risk and regular dialogue with insureds to ensure coverage reflects the realities of AI-driven workflows.

Chris Mather, senior executive, technical underwriting at the LMA, said: “AI is transforming the way professional services firms operate, but it’s essential that underwriters understand the nuances of these new risks. Our report highlights the need for clear policy wordings and careful consideration of how GenAI is used within insured firms."

James McPartland, chair of the LMA’s International Professional Indemnity Committee and class underwriter at Dale Underwriting Partners, added: “As the adoption of GenAI accelerates, E&O underwriters must understand how these technologies are integrated into day-to-day operations of professional services companies, and ensure that coverage is fit for purpose. Collaboration between underwriters, brokers and clients will be key to navigating this evolving landscape.”

A separate LMA survey found that more than a third of London Market firms are already using AI in some aspect of underwriting or claims. Many remain at early stages, however, and report challenges including poor data quality, integration with legacy systems, and uncertainty over return on investment.

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